Suntech troubles hit poly supplier OCI

With Reuters reporting Suntech provided 9% of OCI’s 2012 revenues, the announcement by the Seoul-based poly manufacturer of the cancellation of three large supply contracts to Suntech saw OCI’s share price dive almost 10% to a six-year low at the start of yesterday’s trading before recovering to close 2% down.

OCI announced the termination of two contracts to Suntech’s main Wuxi Suntech manufacturing unit – which entered insolvency in March – and the cancellation of a third contract to Suntech’s European subsidiary after Swiss authorities granted a two-month moratorium to allow the business to restructure debts.

The Wuxi contracts, dating from March and August 2008, are for agreements to supply US$631.5 million and $751.6 million of polysilicon of which $419.4 million and $558.7 million of payments were outstanding, respectively.

The 2011 European contract to supply Suntech Power International with $429 million has an outstanding balance of $390.1 million.